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Pacific Railway Act of 1862: Definition & Summary

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  • 0:00 Definition
  • 0:25 Debating the Pacific…
  • 1:17 The Government in the…
  • 2:06 The Pacific Railway…
  • 2:53 The Results
  • 3:47 Lesson Summary
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Lesson Transcript
Instructor: Amy Lively
This lesson discusses the Pacific Railway Act of 1862. Learn more about the act that authorized the construction of the first transcontinental railroad, and test your knowledge with a quiz.

Definition

The Pacific Railway Act of 1862 authorized the Union Pacific Railroad and the Central Pacific Railroad to build a railroad and a telegraph line beginning in Omaha, Nebraska, and ending in Sacramento, California. The act also provided land from the public domain and government bonds to help pay for the construction. It was signed by President Abraham Lincoln on July 1, 1862.

Debating the Pacific Railway Act

Few people disagreed that the United States needed a railroad that joined the East Coast and the West Coast. Many people disagreed on how to pay for it. Simply laying track through the solid granite of the Sierra Nevada Mountains, soaring as high as 7,000 feet, would cost millions. When the Civil War began in April 1861, the idea of taking on such an expensive project was even less appealing. However, Abraham Lincoln was concerned about talk of secession in California. He desperately wanted to keep California in the Union. Lincoln convinced Congress to pass the Pacific Railway Act, which gave the Central Pacific Railroad and its California investors the authority to build the railroad from the west. When complete, it would connect California to the rest of the nation. A government charter formed the Union Pacific to build the railroad from the east.

The Government in the Railroad Business

The federal government had to help pay for the railroad because there was no citizen or private corporation that could afford it. Government incentives were laid in the form of loans and land. 30-year loans were offered for every mile of track laid. In the flat Plains, the rate was $16,000 per mile. In the mountains of the Great Basin, the government gave $32,000 per mile, and in the Sierra Nevada and Rocky Mountains, the railroad companies received $32,000 per mile. Land grants gave the railroad companies rights to the land within 200 feet on either side of the track. Also, using the checkerboard system, the government gave 10 square miles of land along the track for every mile of track laid, and the plots of land alternated between federal property and railroad property, similar to a checkerboard.

The Pacific Railway Act of 1864

It quickly became apparent that the act needed revision. The government thought that by giving land grants, the railroads would sell land to help pay for construction. That had worked in the East but the West was a different story. Neither company could find many people willing to take a chance on the West. Potential investors argued that the only things the West had to offer were gold or silver. That was fine for prospectors, but who would want to live there, especially with the threat of Indian attacks? Congress responded with the Pacific Railway Act of 1864. The government increased the land grants from 10 to 20 miles, issued loan money faster, and allowed the companies to keep any timber or minerals, such as coal, found during construction. The railroads were also able to raise cash by selling their own bonds.

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